Berkshire Hathaway trims its HP stake as the PC maker continues to underperform

Published Thu, Sep 14 20237:59 AM EDTUpdated Thu, Sep 14 20231:04 PM EDT

Warren Buffett's Berkshire Hathaway sold a portion of its stake in HP as the printer and PC maker continues its underperformance this year, according to a new regulatory filing . The conglomerate sold about 5.5 million shares of HP, worth around $158 million, during a series of transactions Monday, Tuesday and Wednesday, the filing shows. Berkshire still owns more than $3 billion in HP shares after the trimming. Shares of HP fell more than 2% in premarket trading after the news. The Omaha-based investing giant first bought the tech hardware stock in April 2022, becoming the largest shareholder. The bet, however, hasn't been profitable as the stock finished last year down more than 28%. Shares are up only 5% this year, significantly underperforming the market and its tech peers. HPQ 1Y mountain HP Two weeks ago, HP reported revenue for fiscal third quarter that missed analysts' expectations. Analysts said HP's quarter was "disappointing." They believe PC revenues will likely improve going forward but the company's printing business may be more of a sticking point. When the HP stake was initially revealed, Buffett watchers said it was a classic value bet rather than a specific bet on HP's future or products. Meanwhile, Buffett could have been attracted by the consistent capital returns generated by HP's aggressive buyback program and sizable dividends. Morgan Stanley speculated then that Buffett was betting that the hybrid word model is here to stay in a post-pandemic world. Many Buffett followers were reminded of a similar bet in the past that didn't work out very well for Berkshire: IBM. In 2011, Buffett built a $10.7 billion stake in IBM, at an average price of $170 per share, saying he was "hit between the eyes" by how IBM finds and keeps clients. However, by May 2018, Buffett revealed he lost confidence in IBM and no longer owned any stock in the tech company, which had suffered nearly six years of declining revenue and a share price sinking into the mid $140 range.